Call 12: Beware of these credit cards

Now that Halloween is officially over, you’re probably on the couch overdosing on some Milky Way and Snickers bars.

But there are still plenty of things to be scared of financially. I’m talking about credit cards.

CardHub.com, the leading credit-card comparison website, recently identified the “scariest credit cards of 2013.” It compared more than 1,000 cards and came up with the scariest offers on the market for consumers. Comments are courtesy of CardHub.com:

Worst for earning rewards: Visa Black Card. Despite the best efforts of Barclaycard US, you shouldn’t confuse this Black Card with the famed Centurion Card from American Express. While the latter is a status symbol and pop-culture staple, the former is just a grossly overpriced attempt to capitalize on the social cache of the “black card” name.

In return for paying a $495 annual fee, cardholders get 1 point per $1 spent, airport lounge access, the vague promise of luxury gifts and the opportunity to earn 25,000 bonus points if they can manage to spend at least $1,500 during the first 90 days. Those terms might seem decent, but a variety of cards are available that offer more lucrative rewards bonuses, higher ongoing rewards earning rates and airport lounge access for hundreds of dollars less each year.

Worst card for big-ticket purchases: Arvest Bank Classic credit card. It offers a 4.9 percent introductory interest rate on new purchases for 6 months and has a 17.9 percent regular APR. Even if you have the credit standing required to get Arvest Bank’s Gold or Platinum offers, you’d still be sacrificing a lot of value relative to the various cards on the market that offer 0 percent on new purchases for 15 to 18 months.

Any card with an introductory interest rate might seem attractive, but the disparity that exists on the market among specific intro rates, intro terms and regular rates means that consumer costs can vary widely.

CardHub used its credit-card calculator to compare credit cards with introductory rates to see how much each would cost a consumer who is trying to pay off a $1,000 purchase over two years. The three Arvest Bank credit cards were among the most expensive offers out of the more 400 cards evaluated.

Worst card for rebuilding bad credit: First Premier Bank Gold credit card. In addition to a 36 percent interest rate, this card charges a $95 processing fee before account opening, a $75 annual fee during the first year and $120 in membership fees in each subsequent year.

Worst card for students: U.S. Bank College Visa credit card. The card doesn’t provide any rewards or low introductory rates, and students may end up with a regular APR as high as 20.99 percent — one of the highest rates among student cards. For context, the Journey Student Rewards Card from Capital One offers 1.5 percent cash back across all purchases, while the BankAmericard for Students offers 0 percent on new purchases for the first 15 months, and neither charges an annual fee.

Worst for earning rewards: First Hawaiian Bank Business MasterCard. While this card doesn’t charge an annual fee, it doesn’t offer rewards or low introductory interest rates either. Small-business credit cards are known for their business-oriented rewards programs, which are often lucrative enough to warrant paying an annual fee, and business owners who opt for the First Hawaiian Bank Business MasterCard are forgoing an opportunity to earn a lot of free money.

By comparison, the Ink Plus Business Card from Chase offers 50,000 bonus points when you spend $5,000 during the first three months; 5 points per $1 spent on office supplies and telecommunications services (up to a $50,000 spending limit in those categories); 2 points per dollar spent on gas and hotel reservations (up to $50,000); and 1 point per $1 on everything else. It does not charge an annual fee during the first year ($95 thereafter).

Worst for funding: Most small-business credit cards. The Credit CARD Act of 2009 doesn’t apply to business credit cards, which means they don’t benefit from the rule prohibiting issuers from increasing interest rates for existing balances unless a cardholder is at least 60 days delinquent. Most small-business cards make poor funding vehicles, according to CardHub, since the cost of a cardholder’s debt can increase at any time.

Here are a few more CardHub tips on how to avoid becoming a victim of scary credit cards:

Evaluate your needs: There is no one-size-fits-all credit card. From the credit standing needed for approval to the fee structure and associated perks, there are myriad ways in which one credit-card offer may differ from another. Since cards that excel in one particular area are likely to be deficient in others, it’s important that you determine exactly what you need before looking into specific offers.

Focus on cards with no annual fee if you don’t have good or excellent credit because that will enable you to cost-effectively build credit. If you already have above-average credit, opt for rewards if you pay your bill in full every month, or 0 percent intro rates if not.

Use the island approach: The island approach is a credit-card strategy that involves isolating different types of transactions on different accounts to garner the best possible collection of terms. For example, this might entail getting a rewards cards for everyday expenses that you pay off completely by the end of the month and a 0 percent balance-transfer credit card to lower the cost of existing debt.

Compare offers: Consumers too often get hung up on which bank issues their credit card or what cards they’ve seen advertised on TV. Those things don’t matter. Dollars and cents are what counts, so compare relevant offers across issuers to identify the card that will save you the most money.

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